Its objective was to manage and reduce the scheme’s financial risk to the bank. Instead of closing to future accrual, it took the decision to implement a solution that linked to its business values.

The change involved capping pensionable pay increases from March 2015 at 1% a year for all DB members, automatically enrolling DB members into the defined contribution (DC) pension scheme unless they opted out, and offering matching employer contributions up to 12.5% for any salary not pensionable in the DB scheme.

It also offered DB scheme members that joined a new DC scheme a one-off lump sum worth 5% of salary or, if greater, £2,000.

Ian Barrett, reward manager at Santander, said: “We recognised long-serving employees valued their DB scheme, and therefore instead of closing the scheme we wanted to look for a better solution.

“What we did was fair and it preserved the DB scheme for members to continue to build up, but at a capped cost of 1% of pensionable pay. The rest of the pensionable pay would [make] up the employer contributions paid into their new DC scheme.”

Santander consulted with employees, but went through the changes with its unions beforehand and reached an agreement, which was then recommended to employees to accept.

The organisation needed to provide the right communications so employees could make their choice on the change, as staff could either continue to accrue DB and DC benefits, or opt out of DB and join the DC scheme as a full member.

As a result, the firm used a number of methods such as printed guides, an online pensions modeller, an online feedback tool and regulated advice, provided by JLT Wealth Management, at no cost to the employee.

“The regulated advice was also integral to help them go through their individual assessments. It is a very innovative and complex arrangement, but as a result of our efforts we received no formal grievances and [it] was implemented in the Santander way.”